timmint mi - ksa insurance weekly report (issue 2014-20)

SAUDI ARABIA INSURANCE

Weekly Report

Issue - 2014 Week 20

09 to 15 May, 2014

TIMMINT Market Intelligence KSA Insurance Weekly Report 09 to 15 May, 2014

2

From:

TIMMINT

Market Intelligence

To:

Whom it may concern

Subject:

Weekly Status Report, Saudi

Arabia Insurance Industry.

Issue Year 2014, Week 20

Report Sections Page

KSA INSURANCE

NEWS 2

TADAWUL

INSURANCE INDEX 5

MARKET

PERFORMANCE 6

COMPANIES

PERFORMANCE 7

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Disclaimer:

This report was prepared as an

account of work sponsored by the

Company. Certain information has

been obtained from published

sources and is given as of the dates

specified. All the information in this

publication is verified to the best of

the authors’ and publisher’s ability,

but neither the company nor the

Management Team makes any

warranty, express or implied, or

assumes any legal liability or

responsibility for the accuracy

completeness or the results of such

use of the information. All such

information is subject to change

without notice.

KSA INSURANCE NEWS

A.M. Best Special Report: Market Review: Competition,

Top-line Growth Dampen Saudi Insurers' 2013 Performance

Saudi Arabia's insurance market remains one of the main markets within the Gulf Cooperation

Council, with premiums expected to surpass the United Arab Emirates over the next five years,

according to a new report from A.M. Best.

The group said the insurance market saw premiums expand significantly in 2013, and although

growth is expected to slow in 2014, it remains above historical levels.

According to the report, "Competition, Top-line Growth Dampen Saudi Insurers' 2013

Performance," while growth in recent years has been mainly driven by compulsory motor and

medical, the Saudi market saw a substantial loss-making year in 2013, stemming mainly from

inadequate pricing and material reserve deficiencies in the motor and medical portfolios.

Most of the market's premium growth comes from rate increases in these lines of business, with

rates likely to continue rising, as actuaries will need to review technical pricing over the coming

years.

Mahesh Mistry, director, analytics, said: "The challenge that the Saudi insurance market has faced

in recent years has strained not just underwriting performance but also capital adequacy, which

has been in decline in recent years, with net underwriting leverage substantially increasing.

Many insurers have seen a significant erosion of capital and surplus over the past two years. The

market overall needs a capital injection to replenish capital levels, while the process of infusing

capital needs to be accelerated."

A.M. Best expects that strains on capital adequacy and profitability will

likely continue for Saudi insurers in 2014. Many insurers are still below

minimum capital requirements. Continued pressure on operating

performance will likely cause a further strain on risk-adjusted

capitalisation. Solvency margins that are under strain may encourage

reinsurers to offer capital relief programmes.

The uncertainties over the effects of the Saudi Arabian Monetary Agency's (SAMA) 2013 actuarial

review of the technical pricing of both medical and motor insurance have several implications.

Vasilis Katsipis, general manager, market development - MENA, South & Central Asia, added:

"A.M. Best believes that underperforming companies may become less competitive in the market

as their franchises may be affected, while the top performers in these business lines may have

greater flexibility in pricing."

Source: insurancenewsnet.com

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3

A.M. Best Downgrades Ratings of The Mediterranean & Gulf

Insurance & Reinsurance Company B.S.C. (c) and its Main

Subsidiary

A.M. Best has downgraded the financial strength rating to A- (Excellent) from A (Excellent) and

issuer credit rating to “a-” from “a” of The Mediterranean & Gulf Insurance & Reinsurance

Company B.S.C. (c) (Medgulf Bahrain) and of The Mediterranean and Gulf Cooperative Insurance

and Reinsurance Company (A Saudi Joint Stock Company) (Medgulf KSA). The outlook for all

ratings remains stable.

The rating downgrades reflect the reduction in Medgulf Bahrain’s risk-adjusted capitalisation in

2013 following a change in its reserving methodology, which resulted in a material underwriting

loss at the Saudi subsidiary.

In 2013, the entire Saudi insurance market increased the level of conservatism in the calculation of

technical reserves, as instructed by the Saudi Arabian Monetary Agency (SAMA). The change in

reserving basis followed a market-wide strategic review of insurance products, with motor and

medical business lines receiving the greatest scrutiny.

Auditors and actuaries were instructed by SAMA to be more conservative in their assessments of

companies’ technical reserves. In 2013, Medgulf KSA reported an increase in net reserves for

outstanding claims of SAR 466 million (USD 126 million), producing a net loss of SAR 192 million

(USD 51 million) that drove a 16% decrease in the shareholders’ equity. On a consolidated basis,

Medgulf Bahrain reported a net loss of SAR 243 million (USD 65 million), reducing shareholders’

equity by 11%.

While this increase in technical reserves has affected Medgulf KSA’s risk-

adjusted capitalisation, A.M. Best expects the company’s historically strong

operating performance to return and stabilise the group’s capital position.

Medgulf KSA has produced solid earnings for the first quarter of 2014,

reporting a net profit of SAR 51 million (USD 14 million).

Upward rating movement for Medgulf Bahrain could result from evidence that this reserve charge

was a one-time event, and through an improvement in risk-adjusted capitalisation to a level that is

supportive of a higher rating. Downward rating pressure could occur if there was a further

deterioration in Medgulf Bahrain’s operating performance or its risk-adjusted capitalisation was to

decrease to a level not supportive of the current ratings.

The ratings of Medgulf KSA benefit from rating enhancement from Medgulf Bahrain, given its

strategic importance to the group. Upwards and downwards rating movement for Medgulf KSA

could result from a change in its stand-alone assessment or a change in parental support.

Source: Marketwatch

Medgulf lost

$51 million

16% decrease

in

shareholder’s

equity

USD 126

million

increase in net

reserves


4

Consolidation, Private Equity and Emerging-Market Interest

Drove 2013 Global Insurance Merger and Acquisition

Activity

Global insurance merger and acquisition (M&A) activity in 2013 within the property/casualty,

life/health and reinsurance sectors was driven largely by industry consolidation, A.M. Best

research has found, as many companies have been looking to divest noncore assets post-financial

crisis.

According to a release, the number of 2013 deals in

the property/ casualty and reinsurance sectors fell

roughly 25% compared with 2012, while the

life/health industry saw a 15% rise in activity in 2013

over the previous year. While consolidation is an M&A

trend running through all these sectors, private equity

also had a pronounced influence on dealings, as firms

have been focused on increasing their participation in

the insurance sectors.

In addition, interest in emerging markets, as a means to diversify globally and to combat low

interest rates, has increasingly become a driver of M&A activity as well. This review is the

centerpiece of the latest Best's Journal, a biweekly publication that presents A.M. Best's original

research, analysis and commentary on the global insurance industry, available exclusively as part

of a subscription to the Best's Insurance News & Analysis service.

One of the highlights in this issue of Best's Journal included:

Competition, Top-Line Growth Dampen Saudi Insurers' 2013 Performance:

Saudi Arabia's insurance market saw a loss-making year in 2013, due

primarily to inadequate pricing and material reserve deficiencies in the motor

and medical portfolios, according to a Best's Special Report.

Source: insurancenewsnet.com


5

TADAWUL INSURANCE INDEX

Insurance Sector Performance:

The Tadawul insurance index chart illustrates the global performance of all Saudi insurance companies in the stock market, for a

period of one year, showing a year to date change of (21.69%).

Insurance Index - Year to Date Figures

Index as of 31 Dec Current Index Indicator YTD Change % of change

1,207.18 1,468.78 261.80 21.69%

Insurance Index (One Year)

--- Volume --- Index

Tadawul All Share Index - TASI (One Year)

--- Volume --- Index

Insurance Index - 52 Weeks Price

High Date Low Date Current Price

1,382.66 2013/04/15 1,031.43 2013/09/09 1,468.78


6

MARKET PERFORMANCE

The tables hereunder reflect the performance of the listed insurance companies during the last 6 days.

* Last 6 days. * Last 6 days.

* Last 6 days.

* Last 6 days. * Last 6 days.

Company Price

Begin High Low End

Tawuniya 46.5 46.9 45.4 46.1

Medgulf 35.8 36.9 35.4 36.4

Malath Insurance #N/A #N/A #N/A #N/A

Arabian Shield #N/A #N/A #N/A #N/A

SALAMA 39 47.9 38.9 46

SABB Takaful 45.4 48.2 45 46.4

SAICO 51.75 54 51.5 53.5

ATC 60.75 64.5 60 62.25

Gulf Union 27.1 30.9 26.9 29.9

SANAD 20.8 22.55 20.65 22.05

Allianz sf 62.75 66.5 62.25 65.5

Trade Union 28.6 31.1 28.2 30.2

Sagr Insurance #N/A #N/A #N/A #N/A

WAFA Insurance 109.5 113.7

5

98.25 98.25

AICC 23.8 24.6 22.95 24.05

Walaa Insurance 31.4 32.8 31.2 32.2

Saudi Re 13.5 13.65 13.35 13.55

Company Price

Begin High Low End

Bupa Arabia 88 97 85.75 91.5

U C A 27.6 29 27.4 28.5

Al-Ahlia 59 63.5 58.5 59.25

ACIG 29.1 31.4 28.7 30.3

Al Rajhi Takaful #N/A #N/A #N/A #N/A

ACE 67 77 66.5 77

Al Alamiya 100.75 104 97 99.25

AXA-Cooperative #N/A #N/A #N/A #N/A

Gulf General 46.5 49 46.2 48

Weqaya Takaful 25 26 24.9 24.9

Buruj 53 56.25 52.5 56

Wataniya 105.5 108.5 103 103.75

AMANA #N/A #N/A #N/A #N/A

Solidarity 25.9 26.7 25.5 26.2

Enaya 46.6 48.3 45.9 46.4

Alinma Tokio M #N/A #N/A #N/A #N/A

Jazira Takaful 59.75 62 58.5 59.75

ANB insurance #N/A #N/A #N/A #N/A

Top 5 Most Active by Volume

Company Volume Value

Amana Insurance 25,389,344 70,625,446

Saudi Re 19,378,286 39,807,330

Solidarity 15,508,031 39,001,147

SANAD 10,812,870 78,496,019

Gulf Union 9,718,074 78,399,141

Top 3 Gainers/Losers by Value

Company Change

Value %

ACE 10 14.93

SALAMA 7 17.95

Bupa Arabia 3.5 3.98

Company Change

Value %

WAFA Insurance -11.25 -10.27

Wataniya -1.75 -1.66

Al Alamiya -1.5 -1.49

Top 3 Gainers/Losers by Percentage

Company Change

Value %

SALAMA 7 17.95

ACE 10 14.93

Gulf Union 2.8 10.33

Company Change

Value %

WAFA Insurance -11.25 -10.27

Wataniya -1.75 -1.66

Al Alamiya -1.5 -1.49


7

COMPANIES PERFORMANCE

Tadawul – Insurance Companies Charts:

There are presently 35 listed insurance companies onto the Tadawul Stock Exchange. The charts below show their evolution in price and volume for a period of one year or since their first introduction to the list/quote.

Tawuniya

Price Change

Begin High Low End Value %

30.8 49.8 28.6 46.1 15.3 49.68

* One year data --Volume --Last Trade Price MedGulf

Price Change


27.1 37.9 20.5 36.4 9.3 34.32

* One year data --Volume --Last Trade Price Malath

Price Change


#N/A #N/A #N/A #N/A #N/A #N/A

* One year data --Volume --Last Trade Price

Arabian Shield

Price Change


47.5 61.5 29.9 59 11.5 24.21

* One year data --Volume --Last Trade Price SALAMA

Price Change


49.5 66.25 32.8 46 -3.5 (7.07)

* One year data --Volume --Last Trade Price SABB Takaful

Price Change


36.7 51.75 30 46.4 9.7 26.43



8

SAICO

Price Change



* One year data --Volume --Last Trade Price ATC

Price Change



* One year data --Volume --Last Trade Price Gulf Union

Price Change


25.5 34.3 21.2 29.9 4.4 17.25

* One year data --Volume --Last Trade Price SANAD

Price Change


27.5 33.5 17.9 22.05 -5.45 (19.82)


Allianz SF

Price Change


75.25 96.75 58 65.5 -9.75 (12.96)

* One year data --Volume --Last Trade Price Trade Union

Price Change


24.7 31.1 19 30.2 5.5 22.27


Sagr Insurance

Price Change


25.4 42.6 21.55 41.6 16.2 63.78

* One year data --Volume --Last Trade Price WAFA Insurance

Price Change


135 179.75 54.75 98.25 -36.75 (27.22)



9

AICC

Price Change


29.8 30.5 19.5 24.05 -5.75 (19.30)

* One year data --Volume --Last Trade Price Walaa Insurance

Price Change


28.3 34.7 22.9 32.2 3.9 13.78


Saudi Re

Price Change


10.8 14.15 9.45 13.55 2.75 25.46

* One year data --Volume --Last Trade Price Bupa Arabia

Price Change


28.6 97 27 91.5 62.9 219.93


UCA

Price Change


35.6 37.1 20.6 28.5 -7.1 (19.94)

* One year data --Volume --Last Trade Price Al-Ahlia

Price Change


50 80.25 39 59.25 9.25 18.50


ACIG

Price Change


37 41.9 24.4 30.3 -6.7 (18.11)

* One year data --Volume --Last Trade Price AlRajhi Takaful

Price Change


51.5 54.75 38 49.4 -2.1 (4.08)



10

ACE

Price Change


65.5 77 55.25 77 11.5 17.56


Al Alamiya

Price Change


54 104 42.4 99.25 45.25 83.80


AXA Cooperative

Price Change


43.5 55.5 33.1 48 4.5 10.34 * One year data --Volume --Last Trade Price

Gulf General

Price Change




Weqaya Takaful

Price Change


35.5 37.3 24.15 24.9 -10.6 (29.86)


Buruj

Price Change


46.4 61.5 41.2 56 9.6 20.69


Wataniya

Price Change




AMANA Insurance

Price Change


37.3 48.5 30.3 38.5 1.2 3.22



11

Solidarity

Price Change


27.8 29.8 22.1 26.2 -1.6 (5.76)


Enaya

Price Change


40.7 51.25 33 46.4 5.7 14.00


Alinma Tokio M

Price Change




Jazira Takaful

Price Change


11 72.5 11 59.75 48.75 443.18

* 3 months data --Volume --Last Trade Price

ANB Insurance

Price Change


11 87.5 11 75.75 64.75 588.64

* 3 month data --Volume --Last Trade Price


12

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